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Isle victims to
By Russ Lynch
get refunds in pyramid
case settlement
Star-BulletinHawaii residents taken in by the Equinox International Corp. pyramid scam will get some compensation out of a $40 million pool approved by a federal judge in Las Vegas.
Early estimates showed that throughout the life of the scheme, which began in 1992, about 3,000 Hawaii consumers may have paid into it, state officials said today.
The money has to be shared among consumers in at least five other states, as well covering the expenses of the states' attorneys and the Federal Trade Commission, and the amount coming to Hawaii victims won't be known for months.
Nevertheless, the pending payout was hailed locally as a victory.
"It is a good settlement for us," said Patricia Moy, securities enforcement attorney in the securities division of the state Department of Commerce & Consumer Affairs.
The fact that Equinox founder Bill Gouldd has been banned from doing anything like it for the rest of his life underscores the fact that pyramid schemes are illegal, Moy said.
A hearing is set for Sept. 8 to complete the agreement approved in court Thursday. At that time the court will decide whether the amount to be paid out is fair to the victims. Later, a process will established for those who lost money to file claims. The pyramid scheme was operated in the islands by companies called Advance Concepts Hawaii and International Solutions, both affiliates of Las Vegas-based Equinox. Moy said Equinox has been shut down and its assets will be liquidated.
On Thursday, the court approved a preliminary settlement between defendant Equinox and the FTC, Hawaii, Nevada, Pennsylvania, Maryland, North Carolina and South Carolina on the plaintiffs' side. The government lawsuit, which was filed in August, claimed the company was operating an illegal pyramid scheme that violated state and federal laws.
The company was founded in 1991 and marketed a variety of products through independent sales representatives.
It sold water and air filtration systems, dietary and personal care products, household cleaners and cosmetics.
But what made it illegal, officials said, was that participants were to make their money by recruiting other distributors, not by actual sales of the products. The vast majority of investors at the low end of such a pyramid can't possibly make the returns they've been promised, government officials say.
The FTC said the Equinox scheme cheated customers out of more than $200 million.
A trial in the case was scheduled to begin this week but court action was stopped last Monday when the parties told the judge they had reached a settlement.
The Associated Press contributed to this report.
